Income Tax Severed Letters - 2015-09-09

Ruling

2015 Ruling 2014-0548621R3 - Post Mortem Pipeline Planning

CRA Tags
84.1, 84(2)
double pipeline on marketable securities company by s. 104(4)(a) trust and estate/amalgamation at 12 mo's folowed by note redemption over following year/existing debt repayment in interim

Principal Issues: Whether section 84.1 or subsection 84(2) apply to the proposed transactions

Position: Favourable rulings provided.

Reasons: In accordance with the provisions of the Act and our previous positions.

2014 Ruling 2014-0533601R3 - Spin-off butterfly - subsection 55(2)

CRA Tags
55(3.1), 55(2)
matching of PUC of cross-shareholdings to match Part IV tax
spin-off by CCPC under Plan of Arrangement of two businesses/matching of PUC of cross-shareholdings to match Part IV tax/leased property as business property
stated capital distribution effected by set-off
new common shares distinct on basis of right to interim financials

Principal Issues: Whether the proposed spin-off butterfly transactions described in the Ruling meet legislative and administrative requirements

Position: Transactions meet requirements.

Reasons: Consistent with law and administrative requirements.

2014 Ruling 2014-0530371R3 - Combination of credit unions

CRA Tags
88(1)(a), 85.1(1), 88(1)(e.2), 137(4.4), 85.1(2)(d), 88(1)(b), 137(6), 137(4.1)
s. 137(4.1) inapplicable to Buyer of credit union who winds it up rather than becoming a member
credit union share-for-share exchange/ cash redemption
"immediately before" referenced share ownership on completion of the preceding transaction in a same-day series

Principal Issues: Whether: (1) subsection 85.1(1) applies to the share for share exchange pursuant to which Acquireco would acquire all the shares that each member of Targetco holds in exchange for shares in Acquireco; (2) subsection 88(1) applies to the transfer of the rights, property and assets of Targetco distributed to Acquireco on the dissolution of Targetco; and (3) subsection 137(4.1) applies to Targetco's transfer of its rights, property and assets to Acquireco on the winding-up

Position: (1) Yes; (2) Yes; (3) No

Reasons: (1) Subsection 85.1(1) applies to the exchange pursuant to which the vendor exchanges shares in Targetco for shares in Acquireco; (2) For the purposes of paragraph 88(1)(a), we should consider that not less than 90% of the issued shares in the subsidiary will be held by the parent "immediately before the winding-up" since all the shares of the subsidiary will be owned by the parent prior to the transfer of its assets and the assumption of its liabilities, and its ultimate dissolution; (3) Acquireco will not become a member of Targetco, as that term is defined in subsection 137(6), at any point in time during the process leading to Targetco' dissolution

2014 Ruling 2013-0514561R3 - Payment in lieu of continued PHSP coverage

CRA Tags
63, 5
lump sum settlements of CCAA claims under private health services plans denied future credits
lump sum settlements of CCAA claims under private health services plans were non-taxable

Principal Issues: Will a lump sum payment in lieu of continued PHSP coverage for retirees of an employer that entered into insolvency prior to XXXXXXXXXX be taxable?

Position: No

Reasons: See below.

Technical Interpretation - External

30 July 2015 External T.I. 2015-0596841E5 - Definition of personal trust

CRA Tags
248(1) "personal trust", 108(7)
proportionate contributions by beneficiaries to trust

Principal Issues: Would CRA confirm the submitter's view that in the given fact scenario, the proportionate capital contributions by beneficiaries will not result in the trust failing to meet the "personal trust" definition?

Position: No.

Reasons: We do not agree with the submitter's view and have not been provided with persuasive arguments to support their position.